In the first half of 2025, the Chinese consumer credit industry maintained stable growth despite economic uncertainty and regulatory pressure. Through the upgrading of AI technology in credit decision-making and risk management, the industry served more than 60 million users, leading to a year-on-year increase of approximately 140% in total loan amounts. The issuance of ABS reached a record high, while also deepening embedded financial layouts, expanding internet platform cooperation, and achieving high-quality development.

The company continues to promote the AI+ banking strategy, upgrade intelligent credit agents, and enhance financial service capabilities. Collaborating with AI hardware suppliers to customize AI devices, improve product competitiveness. The products cover user acquisition, risk management, etc., expected to address the shortage of risk personnel and improve approval efficiency. The bank orders are expected to be launched in Q3. Responding to regulations, optimizing compliance operations. In terms of overseas operations, the small-scale operation in the UK has been initiated, showing good performance. Plans to strengthen risk models and explore more international markets.

The second quarter financial report shows that despite facing economic uncertainties, the company still achieved revenue growth, mainly benefiting from the increase in capital-intensive loans. At the same time, the company strengthened risk control, adjusted its business portfolio, and continued to advance shareholder return plans, including stock buybacks and dividends. Looking ahead, the company will adopt a cautious strategy, optimize operational efficiency, and expects third-quarter non-GAAP net profit to be between 160 million and 180 million RMB.

Discussed the management's latest views on the growth of loan volume, pointing out that consumer loan demand may rebound compared to the beginning of the year. At the same time, the latest trends in rates were analyzed, with some areas performing better than expected, and the possibility of rates staying at current levels in the coming years and the factors that may drive change were explored.

The dialogue discussed the recent soft demand in the consumer credit market, pointing out that although the government has introduced subsidy policies, the short-term effects are limited. At the same time, industry adjustments have increased the difficulty for some users to obtain loans, affecting business development. Faced with regulatory uncertainties, the company will prioritize risk management and expects that after the implementation of new regulations in the fourth quarter, the market will gradually be cleaned up, industry competition will become more rational, and this will be beneficial for long-term operations and increasing market share.

Discussed the potential impact of new regulatory policies on Ice business, believed to be beneficial for the long-term health and sustainability of the industry. Ice business will maintain healthy rates, while also evaluating various response plans. Regarding overseas markets, the company values technological capabilities and fair competition, and is promoting growth through organic means and local collaborations. Specific strategies are currently being evaluated.

The conversation emphasized the importance of technology and operations as core driving forces, pointing out that the key to sustainable survival in the industry cycle lies in having genuine technology and a firm commitment to serving users. The company considers global expansion as a strategic focus, taking into account regulatory environment, fintech acceptance, innovation, and the maturity of financial infrastructure when selecting target markets. Particularly, it places special emphasis on using AI and big data technology advantages to improve user risk assessment accuracy and provide differentiated products and pricing in markets with clear regulations and encouragement for innovation. In overseas markets, such as the UK, the initial focus is on market understanding and risk model optimization, adopting a cautious strategy.

During the investor communication session, a representative from a well-known financial institution raised follow-up questions, aiming to have a better understanding of the progress and strategic direction of the related business, showing the investors' high level of attention and professional insight to market dynamics.

The quarterly changes in asset quality were discussed, especially the increase in the C2 ratio, attributed to the increased risks in embedded financial businesses and channel adjustments. Looking ahead, the importance of balancing risk and competitiveness was emphasized. At the same time, the quarterly profit forecast for the third quarter showed a decrease, involving assumptions factors such as loan volume, asset quality, and loan structure.

Discussed the impact of new regulations and tight liquidity on loan business, as well as measures to address these challenges through optimizing risk management and asset allocation strategies, including enhancing pre-loan approval models, adjusting risk control policies, optimizing recovery strategies, and maintaining adequate reserves to manage potential risks.

With the implementation of new regulatory rules, the industry faces challenges of liquidity tightening and risk fluctuations. In response to this situation, further risk management control measures have been taken, it is expected that the loan volume will moderately decrease and the loan portfolio will tilt towards capital-intensive businesses, but the change will not be significant. This move will affect the speed of revenue recognition and profitability, while the risk level is expected to slightly increase but still remain manageable. In terms of financial performance, pricing, financing costs, and customer acquisition costs are expected to remain stable.

The conversation revolves around the company's stock buyback plan. Currently, the $45 million buyback plan has completed the majority, purchasing more stocks than the annual target for 2024, accounting for 9% of the initial number of shares. Faced with market fluctuations and regulatory uncertainties, the company will adopt a flexible strategy to optimize capital allocation efficiency, and will be dedicated to providing industry-leading shareholder returns in the long term.

The 2025 ABS issuance plan was discussed, with the total annual issuance expected to increase by over 30%. Due to the higher proportion of ABS in the funding structure, it is anticipated that the funding cost will significantly decrease. In the first half of 2024, ABS issuances reached 1.44 billion RMB, a year-on-year increase of approximately 45%. The issuance speed will be adjusted in the second half of the year according to liquidity conditions, and it is expected that the funding cost in 2025 will be noticeably lower than in 2024.